Developer wins tax break on Filene’s site

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Current construction at the Filene’s Downtown Crossing site is focused on the rehabilitation of the original 1912 Beaux Arts-style building.

By Casey Ross
Globe staff
September 27, 2013

The Boston Redevelopment Authority on Thursday approved a $7.8 million tax break for a massive development at the former Filene’s property, a deal officials said will help lure a new mix of stores and office tenants to downtown Boston.

The board’s unanimous vote came after a brief overview of the agreement, which is designed to lower costs for retailers and other companies that agree to open at the Filene’s site.

A group of protesters appeared at the meeting to argue the BRA is giving the tax break without securing enough benefits for the community, such as additional affordable housing and jobs for people of color. Because public comment was not allowed during the meeting, many held signs questioning the deal’s terms.

“We want public resources to be used for the public good,” Mark Liu of the Chinese Progressive Association said before the meeting. “If they are going to give a tax break, something should be coming back to the community.”

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But BRA officials said the Filene’s project will have significant community benefits, including the creation of 2,000 permanent jobs, improvements to MBTA property and other public land, and a large supply of new stores and homes. While the city will provide a $7.8 million tax reduction over 13 years, the project is expected to generate nearly $60 million in revenues for the city over the same period.

“It is critical that the project attract a mix of high-quality office and retail tenants so that it will have a significant transformative impact on the Downtown Crossing area,” said Heather Campisano, a director of development review at the BRA. “A project with such a tenant mix could not happen without this tax agreement.”

The project’s developer, Millennium Partners, is building a $630 million complex of offices, stores, and up to 450 condominiums at the site. BRA officials said the tax deal is not being applied to the project’s luxury residences, which will be housed in a 625-foot glass tower to be constructed at the corner of Washington and Franklin streets.

Millennium has already signed a major lease with the advertising firm Arnold Worldwide, which will occupy several floors of the restored 1912 Filene’s store. Roche Bros. has also committed to opening a grocery store in the basement level of that building.

Executives with Millennium held a formal groundbreaking celebration on the property last week, saying their project will make Downtown Crossing a top destination for shoppers and new residents.

The district still has empty storefronts and a random mix of retailers, but it has recently begun attracting new restaurants and stores. In addition to the Filene’s project, Millennium and other developers are building more than 600 luxury residences in the area.

The tax deal represents a reversal in Mayor Thomas M. Menino’s stance on incentives for the Filene’s project. Just three years ago, he angrily refused to provide tax incentives to a former developer, Vornado Realty Trust of New York, that had stopped work on the property during the economic downturn.

Vornado’s chief executive, Steven Roth, had suggested publicly that allowing a property to become blighted could help extract tax concessions from the city. At the time, work on the Filene’s property was stalled due to financial problems, leaving a giant construction crater at the city’s core.

Menino and BRA officials have said that offering the incentives now will ensure that Millennium will be able to finish the long-troubled project and deliver on the promise of bringing new shopping and dining options to the area.

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